QUALCOMM, Inc. (QCOM)’s New Chip Affects Apple Inc. (AAPL) and Samsung

In the meantime, this new chip should eliminate concerns about Qualcomm’s operating leverage and margin pressure from Broadcom Corporation (NASDAQ:BRCM) . Even though Broadcom’s management guided for 8.2% growth in Q1 revenue, it still suggests 5% sequential decline. And the company has already received the Street’s forgiveness after a “less bad” quarter. So, if we can agree that Qualcomm might suffer some cannibalization effects, it also makes sense to assume that Broadcom would see a decline in orders. For that matter, so should NVIDIA, even though the company recently boasted about taking market share at any cost.

However, this will be hard to do given Qualcomm’s already 52% market share in baseband chips. Plus, Qualcomm projecting 17% growth in handset licenses for this year means that company plans to squeeze every bit of business it can in the market. Logically, if we can expect a weak next couple of quarters from Qualcomm due to soft orders, we should assume worst for rivals. But for now, the company is setting new standards, while pioneering the transition between device generations. Remarkably, at one point, investors were worried that Qualcomm was funneling too much of its profits back into research and development. Clearly these R&D investments are about to make investors very wealthy.

The article Qualcomm’s New Chip Affects Apple and Samsung originally appeared on Fool.com and is written by Richard Saintvilus.

Fool contributor Richard Saintvilus owns shares of Apple. The Motley Fool recommends Apple and NVIDIA. The Motley Fool owns shares of Apple and Qualcomm.

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